Govt. mulls plans to merge Youth, Women, Uwezo funds

The government has renewed plans to merge state managed funds in an effort of making lending more affordable.

The move will see the Uwezo, Youth Enterprise Development and Women funds merged into one, with the government mulling the creation of a Biashara Bank that will offer affordable credit to small and medium sized companies.

This comes as a report released by the Kenya National Bureau of Statistics indicates that most startup companies avoid banks and the state funding agencies in favor on family loans to start out their business ventures.

“We have youth fund, women fund that are helping startups to grow. In the near future all these agencies will be amalgamated to one to form Biashara Bank that will target small medium enterprises. Those are plans of the government to ensure financing is available to the small medium enterprises,” Trade and Industrialization Principal Secretary Julius Korir said.

The Micro, Small and Medium Establishments Survey Report shows that only one percent of the country’s SMEs access credit through the government funds.

The PS made the remarks on the sidelines of the NIC Bank SME summit.

NIC Bank Group Managing Director John Gachora urged SMEs to also seek alternative capital channels by turning to angel and private equity investors to scale up their businesses.

“We now have a sizable number of private equity funds in this country. When I speak with entrepreneurs, you are very unwilling to let go any part of the business and that is where you miss out,” Mr Gachora stressed.

Mr Gachora however said the recent move to cap interest rates would work to support SMEs access cheap credit.

Commercial banks, through the Kenya Bankers Association have also agreed to put a Sh30 billion fund that will be used to offer loans to SMEs at below market interest rates.